Successful Short Term Forex Trading
Successful Short Term Forex Trading
Successful short term Forex trading is the goal of many new
traders who enter the Forex markets each year. For them, life begins and ends
on the one or five minute chart. It is important to understand that the trend
on a small time frame chart may only be a retracement of the primary trend from
a higher time frame chart. As a result, understanding the higher time frame
trend is an important step in becoming a successful, short term Forex trader.
Range Bound Vs. Trend Bound
Certain asset classes tend to be range bound and others tend
to move in trends. One asset that does trend well is the spot Forex market.
Currencies are based on economies, and it takes a long time for economies to
complete the four stage business cycle of expansion, peak, contraction, and
trough. While the primary trend marches on for months and years, there can be
several intermediate term trends lasting days and weeks.
These intermediate term trends offer short term Forex
traders many opportunities to trade long and short with the primary trend, or
counter to the primary trend. Each type of trading has specific rules. Counter
trend traders must exit a position quickly in the event that the primary trend
resumes. Currency traders all over the world like to observe the trend from the
previous trading session, and pile on in that direction during their session.